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Centene to buy WellCare for $15 billion, create Medicaid powerhouse

Speaker of the House Nancy Pelosi, D-Calif., joined at left by Energy and Commerce Committee Chair Frank Pallone, D-N.J., speaks at an event to announce legislation to lower health care costs and protect people with pre-existing medical conditions, at the Capitol in Washington, Tuesday, March 26, 2019. The Democratic action comes after the Trump administration told a federal appeals court that the entire Affordable Care Act, known as "Obamacare," should be struck down as unconstitutional. (AP Photo/J. Scott Applewhite)
Speaker of the House Nancy Pelosi, D-Calif., joined at left by Energy and Commerce Committee Chair Frank Pallone, D-N.J., speaks at an event to announce legislation to lower health care costs and protect people with pre-existing medical conditions, at the Capitol in Washington, Tuesday, March 26, 2019. The Democratic action comes after the Trump administration told a federal appeals court that the entire Affordable Care Act, known as "Obamacare," should be struck down as unconstitutional. (AP Photo/J. Scott Applewhite)

By Associated Press 3 min read

Centene is spending more than $15 billion on rival WellCare to dive deeper into government-funded health coverage in the same week that President Donald Trump’s administration renewed its attack on the Affordable Care Act.

The insurer said Wednesday that its cash-and-stock deal to buy WellCare will create an insurer that manages Medicaid coverage for more than 12 million people and covers several million more in the federal government’s Medicare program for people age 65 and older.

The deal comes after the administration attacked the ACA in court Monday, saying that former President Barack Obama’s health care law should be declared unconstitutional after Congress repealed one part of it – unpopular fines on people who remain uninsured. The 2010 Affordable Care Act expanded coverage to millions of people by creating individual insurance exchanges and increasing Medicaid enrollment in several states.

Centene Corp., based in St. Louis, has built its business around Medicaid, the state and federally funded program for people who are poor or disabled, but it also has expanded aggressively on the exchanges.

The WellCare deal could help Centene improve its profitability and protect against any risks that stem from threats to the ACA, SVB Leerink analyst Ana Gupte said in a research note.